Learning history: worth it for comedic value

In 1930, Congress passed the Smoot-Hawley Tariff Act. The bill was sponsored by republican senator Reed Smoot and republican representative Willis Hawley. The Act raised taxes on over 20,000 US exports – and was passed through Congress and by the President, despite a petition signed by over 1,000 economists and businesspeople.

Its purpose was to increase domestic industrial productivity. To put things in perspective, this went into effect a few months after the Stock Market Crash of 1929. History refresher: Herbert Hoover was POTUS from 1929 – 1933.

The primary effect of raising tariffs isn’t increased domestic productivity (although, admittedly, that is a side-effect). It’s pissing off foreign countries. This particular act pissed foreign countries off so badly that they also raised tariffs – which means consumers abroad stopped purchasing and investing in US goods. So much for net exports!

In years following the passage of the act, given that it was passed right as the proverbial shit really hit the fan, unemployment doubled, and its estimated that net exports decreased 33% (although, like just about everything, economists are not entirely in agreement on this estimate – but it uses my favorite kind of statistical data analysis, so I’m gonna stick with it). Basically, shit got so bad that FDR used Hoover’s involvement in the Smoot-Hawley Act (which was actually reluctant, but he gave into peer pressure and let it slide) as part of his campaign platform in 1932.

[I swear I’m going somewhere with this, hang in there]

In 2009, after the same proverbial economic shit hit the fan in 2008, republican congresswoman Michelle Bachman brought the Act up in a House debate. Okay, sure, relevant, I guess, if we’re talking about the effects of foreign trade during a recession.

Except she referred to it as the “Hoot-Smalley” Act and blamed FDR’s administration for it.